550 Empty envelope senders not allowed in Exchange Online Office365 hybrid

Issue

In a hybrid Exchange environment of Exchange 2013 and Exchange Online, mail sent to a specific distribution group was only delivered in some mailboxes.

Investigation

The issue had the following characteristics

  • Sender is an Office365 user
  • Distribution group contains both O365 users and on-premises users
  • Mail sent to this Distribution group is only received by O365 users

The error in Exchange Online was:
Reason: [{LED=550 permanent failure for one or more recipients ‎(emailaddress:550 Empty envelope senders not allowed)

So, what does this “550 Empty envelope senders not allowed” message tell us? Apparently, the on-premises mail gateway rejected the message, because envelope senders was missing.
According to this Microsoft KB-article, the values ReportToManagerEnabled and ReportToOriginatorEnabled should not be both $false

Solution

To verify this thing was the issue, run the following command in your On-Premises Exchange Powershell:
Get-DistributionGroup -Identity dg-test | fl Displayname,*Report*
DisplayName : dg-test
ReportToManagerEnabled : False
ReportToOriginatorEnabled : False

As you can see, both values were set to False. This caused the error.

To adjust, run:
Get-DistributionGroup dg-test | Set-DistributionGroup -ReportToOriginatorEnabled $true
or
Get-DistributionGroup dg-test | Set-DistributionGroup -ReportToManagerEnabled $true

To verify all your distribution groups, run:
Get-DistributionGroup | ft Displayname,*Report*

 

550 Empty envelope senders not allowed

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